UN Development Programme chief William Orme discusses the 2011 Human Development Report section that concerns a global tax. [Video]
2011 Human Development Report
“The tax can be a simple proportional levy on individual foreign exchange transactions assessed on foreign exchange dealers and collected through existing financial clearing or settlement systems. Because the financial infrastructure is now in place, a currency transaction tax can be implemented relatively quickly and easily.”
Panel members have voiced different views on the role of taxation to raise more money for humanitarian aid. However, there was broad agreement that the world needs to move towards new models of funding global public goods, including humanitarian aid. We believe that in our interconnected world we need to find new ways to fund solidarity that goes beyond national borders. We have considered the political feasibility, costs and benefits of a financial transaction tax (FTT) or Tobin Tax, estimated to raise between US$ 25 and US$ 34 billion annually in Europe. It has the potential to serve broad development objectives, including funding humanitarian action. At the same time it continues to be the subject of debate, and the panel acknowledges the unlikelihood of a global agreement on FTT in the near future. We see the adoption of voluntary “solidarity levies”, for instance on airline tickets which have been introduced by some governments, as a viable option that merits greater investment and development. UNITAID funds its work in finding new ways to treat, prevent and diagnose malaria, tuberculosis and HIV/AIDS with an air ticket levy. As this NGO itself rightly argues, “the simple act of catching a plane turns passengers into contributors to the cause of saving lives—it is responsible travel on an enormous scale”.
The UNITAID micro-levy on airline tickets raised €1.6 billion between 2006 and 2011, with the participation of just ten countries, helping to fund treatments and diagnostics for HIV/AIDS, malaria and tuberculosis in low-income countries. We recommend that at the WHS in Istanbul governments voluntarily sign up to the successful model of a solidarity levy and create a steady flow of revenues for humanitarian action . We propose that additional revenues from a solidarity levy on air travel or fuel could be used to support the provision of health services in camps and urban areas hosting displaced people. Ensuring the good health of people on the move is a global public good that deserves to be supported by an international funding source.
“We conclude that, contrary to what is often assumed, a Tobin tax is feasible and, if appropriately designed, could make a significant contribution to revenue without causing major distortions. However, it would be unlikely to reduce market volatility and could even increase it.”